Absorptive capacity development in Indonesian exporting firms: How do institutions matter?

Janti Gunawan*, Elizabeth L. Rose

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

15 Citations (Scopus)

Abstract

This paper addresses how firms from an emerging market characterized by a challenging and variable institutional environment learn about internationalizing. Building on the organizational learning and institutional literatures, and the concept of absorptive capacity (AC), and using a sample of Indonesian manufacturing-sector exporters we identify two dimensions of internationalization-related AC: international market and international strategic operation. Unlike previous literature, we find that indirect, or second-hand, experience contributes more than the firm's own experience to the development of international market AC. Furthermore, the second-hand experience feeds Indonesian manufacturing exporters' learning in both positive (e.g., buyers) and negative (e.g., suppliers and foreign multinationals in Indonesia) ways. In contrast, the development of international operation strategy AC appears to be driven internally, with minimal contribution from either first- or second-hand experience. We posit that these outcomes are influenced by the rapid and substantial changes in the domestic institutional environment faced by the Indonesian manufacturers.

Original languageEnglish
Pages (from-to)45-54
Number of pages10
JournalInternational Business Review
Volume23
Issue number1
DOIs
Publication statusPublished - Feb 2014
MoE publication typeA1 Journal article-refereed

Keywords

  • Absorptive capacity
  • Export
  • Indonesia
  • Internationalization
  • Learning

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